Medinotec Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 66 Table of Contents As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below. 1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ended February 28, 2023. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. 2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. 3. Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. We have not remedied the material weaknesses as of February 28, 2023. The Company plans to take remedial action to address these weaknesses during the fiscal year ended 2024. Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the year ended February 28, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except the implementation of the controls identified above. ITEM 9B. OTHER INFORMATION None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 67 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The following information sets forth the names, ages, and positions of our current directors and executive officers. Name Age Position(s) and Office(s) Held Gregory Vizirgianakis 44 President, Secretary, CEO and Director Pieter van Niekerk 38 CFO, Treasurer and Director Stavros G. Vizirgianakis 51 Director (1) Joseph P. Dwyer 66 Director (1) (1) Appointed as Director on June 13, 2022. Set forth below is a brief description of the background and business experience of our current executive officer and director. Gregory Vizirgianakis The Company is led by Dr Vizirgianakis as the Chief Executive Officer, a qualified medical doctor, with a specialty interest in the field of neuroscience. He has many years of experience in the international and South African health markets. Dr Vizirgianakis is the founding ultimate shareholder of DISA Medinotec Proprietary Limited and has been involved in several successful entrepreneurial ventures. For the last five years, Dr. Vizirgianakis has been employed as CEO of Minoan Medical Proprietary Limited and DISA Medinotec Proprietary Limited. Aside from that provided above, Dr. Vizirgianakis does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. The Board believes that Dr. Vizirgianakis has the experience, qualifications, attributes and skills necessary to serve on the Board because of the fact that he held similar positions for more than 10 years and his designation as a medical doctor, he is also a founding shareholder in the company and has a long-standing track record in the industry. Pieter van Niekerk Mr. Pieter van Niekerk is a qualified Chartered Accountant and the Company's CFO and has been involved in multiple listings on various exchanges in the United States of America and South Africa. He has 10 years executive management experience and has been nominated as one of the “Top 35 under 35 Chartered Accountants” in South Africa for two consecutive years. For the last five years, Mr. van Niekerk has been employed as CFO of Minoan Medical Proprietary Limited and DISA Medinotec Proprietary Limited. Aside from that provided above, Mr. van Niekerk does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. The Board believes that Mr. van Niekerk has the experience, qualifications, attributes and skills necessary to serve on the Board because of the fact that he held similar positions for more than 10 years and his designation as a chartered accountant, he is also a founding shareholder in the company and has a long-standing track record in the industry. 68 Table of Contents Stavros G. Vizirgianakis Mr. Vizirgianakis became the Interim Chief Executive Officer of Misonix in September 2016 and the full-time President and Chief Executive Officer in December 2016. Mr. Vizirgianakis has a distinguished career in the medical devices field having worked for United States Surgical Corporation as director of sales for sub-Saharan Africa and later Tyco Healthcare in the capacity of General Manager South Africa. In 2006, Mr. Vizirgianakis co-founded Surgical Innovations, which has become one of the largest privately owned medical device distributors in the African region, and now part of the Johannesburg Stock Exchange listed entity Ascendis Health. In that capacity, Mr. Vizirgianakis acted as a distributor of the Company’s products. Mr. Vizirgianakis was Managing Director of Ascendis Medical from January 2014 through July 2016. Mr. Vizirgianakis also served on the board of Tenaxis Medical and is a strategic investor in and advisor to numerous medical device startups and established companies in this field. Aside from that provided above, Mr. Vizirgianakis does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. Mr. Vizirgianakis has a degree in commerce from the University of South Africa. The Board believes Mr. Vizirgianakis’ industry knowledge, sales and marketing experience and his international business relationships qualify him to serve as a director. Joseph P. Dwyer Mr. Dwyer has served as Misonix’s Chief Financial Officer since August 2, 2017. From June 2015 to the present, Mr. Dwyer has provided financial consulting and advisory services to various companies, through the firms Dwyer Holdings and TechCXO. Prior thereto, from November 2012 until June 2015, he was Chief Financial Officer of Virtual Piggy, Inc., a publicly traded technology company. Prior to joining Virtual Piggy, Mr. Dwyer served as chief financial officer of Open Link Financial, Inc., a privately held company, which provides software solutions for trading and risk management in the energy, commodity, and capital markets. During 2011 and 2012, Mr. Dwyer was a member of the board of directors and chairman of the audit committee and served as interim chief administrative officer of Energy Solutions International, Inc., a privately held company providing pipeline management software to energy companies and pipeline operators. From 2010 through 2011, Mr. Dwyer served as chief administrative officer of Capstone Advisory Group, LLC, a privately held financial advisory firm providing corporate restructuring, litigation support, forensic accounting, expert testimony and valuation services. Mr. Dwyer served as a consultant to Verint Systems, Inc., a software company listed on the NASDAQ Global Market, from 2009 through 2010, assisting with SEC reporting and compliance. From 2005 through 2009, Mr. Dwyer served as chief financial officer and executive vice president of AXS-One Inc., a publicly traded software company. During 2004, Mr. Dwyer served as chief financial officer of Synergen, Inc., a privately held software company providing energy technology to utilities. Prior to 2004, Mr. Dwyer also served as chief financial officer and executive vice president of Caminus Corporation, an enterprise application software company that was formerly listed on the NASDAQ National Market, chief financial officer of ACTV, Inc., a digital media company that was formerly listed on the NASDAQ National Market, and chief financial officer of Winstar Global Products, Inc., a manufacturer and distributor of hair care, bath and beauty products until its acquisition by Winstar Communications, Inc. in 1995 when Mr. Dwyer went on to serve as senior vice president, finance of Winstar Communications. Aside from that provided above, Mr. Dwyer does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. Mr. Dwyer received his BBA in Accounting from the University of Notre Dame in 1978 and is licensed as a Certified Public Accountant in the State of New York. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. 69 Table of Contents Significant Employees We have no significant employees other than our officer and director. Family Relationships Aside from Messrs. Gregory Vizirgianakis and Stavros G. Vizirgianakis, who are brothers, there are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers. Involvement in Certain Legal Proceedings. During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including: 1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; 2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; ii. Engaging in any type of business practice; or iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; 4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; 5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; 6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: i. Any Federal or State securities or commodities law or regulation; or ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 70 Table of Contents ITEM 11. EXECUTIVE COMPENSATION. The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended February 28, 2023 and 2022. SUMMARY COMPENSATION TABLE Name and principal position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) (2) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Gregory Vizirgianakis 2023 — — — — — — — — CEO 2022 — — — — — — — — Peter van Niekerk 2023 — — — — — — — — CFO 2022 — — — — — — — — Narrative Disclosure to the Summary Compensation Table Although we do not currently compensate our officers with any regularity, we reserve the right to provide compensation at some time in the future. Our decision to compensate officers depends on the availability of our cash resources with respect to the need for cash to further business purposes. Outstanding Equity Awards at Fiscal Year-End The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as of February 28, 2023. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END OPTION AWARDS STOCK AWARDS Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) Gregory Vizirgianakis Peter van Niekerk 71 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth, as of May 30, 2023 , the beneficial ownership of our common and preferred stock by each executive officer and director, by each person known by us to beneficially own more than 5% of our common stock and by the executive officers and directors as a group. Unless otherwise noted, the address of each beneficial owner is located at Northlands Deco Park | 10 New Market Street | Stand 299 Avant Garde Avenue | North Riding | 2169. Title of class Name and address of beneficial owner (1) Number of shares - Beneficial ownership Percent of class (2) Common Gregory Vizirgianakis (3) 4,750,179 40.5% Common Peter van Niekerk 401,965 3% Common Stavros G. Vizirgianakis (4) 4,750,179 40.5% Common Joseph P. Dwyer 0 0% Total of All Directors and Executive Officers (4 persons): 9,902,323 84% More Than 5% Beneficial Owners: NONE (1) As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date. (2) The percent of class is based on 11,733,750 voting shares as of May 30, 2023. (3) Includes 1,108,327 shares held in his name and 3,641,852 shares held in King Style Investments, formed in Cyprus, in which Gregory has beneficial ownership over 43. 39655% of the shares held by King Style Investments. (4) Includes 4,750,179 shares held in King Style Investments, formed in Cyprus, in which Stavros has beneficial ownership over 56.60345% of the shares held by King Style Investments. 72 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Other than as disclosed below and in “Executive Compensation,” there have been no transactions involving the Company since the beginning of the last fiscal year, or any currently proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest. Related Party Summary Name Relationship with the Medinotec Group of Companies Related transactions with the Medinotec Group of Companies Related Directors with the Medinotec Group of Companies Related Owners with the Medinotec Group of Companies Minoan Medical Proprietary Limited Medical investment company controlled by Dr Gregory Vizirgianakis Related Party Loan and Sales Dr Gregory Vizirgianakis Pieter van Niekerk Dr Gregory Vizirgianakis is the ultimate beneficial owner Minoan Capital Proprietary Limited Property investment company controlled by Dr Gregory Vizirgianakis Related party loan Rental Expenses Dr Gregory Vizirgianakis is the ultimate beneficial owner DISA Vascular Distribution Proprietary Limited trading as DISA Lifesciences Distributor appointed by DISA Medinotec Proprietary Limited for Africa Sales Income Pieter van Niekerk – Serves as independent non-executive according to distribution agreement Pieter van Niekerk resigned as a non-executive director on October 14, 2022 and therefore the related party relationship ceased to exist on the same date. n/a external third party Medinotec Capital Proprietary Limited The African holding company of the Medinotec Group of Companies Related party loan payable to Minoan Capital Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity DISA Medinotec Proprietary Limited The African operating and manufacturing company Related party loan with Minoan medical Operational income and expenses with Minoan Medical Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity Medinotec Incorporated Nevada Ultimate parent of Medinotec Capital and DISA Medinotec All of the above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Medinotec Group of Companies The Consolidated group name of Medinotec Incorporated, Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Pieter van Niekerk Chief financial officer of the Medinotec Group of Companies Transactions relating to mutual entities disclosed above Related directorships disclosed above Minority Shareholder in Medinotec Inc Gregory Vizirgianakis Chief Executive officer of the Minoan Group of Companies Brother of Stavros Vizirgianakis Transactions relating to mutual entities disclosed above Related directorships disclosed above Shareholder in Medinotec Inc and Kingstyle investments. Stavros Vizirgianakis Non-Executive director of the Medinotec Group of companies Brother of Gregory Vizirgianakis Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a Joseph Dwyer Non-Executive director of the Medinotec Group of companies Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a 73 Table of Contents a. Rent DISA Medinotec Propriety Limited leases commercial buildings from Minoan Capital Proprietary Limited (“Minoan Capital”). Minoan Capital is owned 100% by the Chief Executive Officer of the Medinotec Group of Companies, Dr. Gregory Vizirgianakis. Pieter van Niekerk, CFO of the Medinotec Group of Companies, also serves as a director on Minoan Medical Proprietary Limited. Set forth below is a table showing the Consolidated entities’ rent paid and accounts payable for the year ended February 28, 2023, with Minoan Capital: February 28 2023 (audited) For the period April 26, 2021 to February 28, 2022 (audited) Rent 39,984 38,157 Rent is comparable to rent charged for similar properties in the same relative area. The Consolidated entities do market research of a Minimum and a Maximum rental value within the area at every renewal of the rental agreement to ensure this is market related, this exercise is undertaken together with a registered property agent who has the appropriate knowledge of the area. ASC 850-10-50-6. b. Loan This is an unsecured loan from the prior parent entity of DISA Medinotec Proprietary Limited incorporated in South Africa called Minoan Medical Proprietary Limited. This loan originated to fund working capital and capex expansions of DISA Medinotec Proprietary Limited Incorporated during the developmental and startup phase. After the acquisition of DISA Medinotec Proprietary Limited into the Medinotec Group of companies, the Medinotec Group of Companies assumed this liability. During the Covid challenges, interest on the loan was waived due to the loan being classified as an equity investment at that stage, before the post balance sheet transfer of DISA Medinotec Proprietary Limited Incorporated to the Medinotec Group of Companies. The Medinotec Group of Companies have a period of 3 years post any IPO date/ date at which the company starts trading on a recognizable exchange to repay the loan. During these 3 years the loan will carry interest at the prevailing prime lending rate of the time. The prevailing prime lending rate on the quarter ending February 28, 2023 in South Africa is 10.75%. The interest charged for the quarter was $51,545 and a 1% movement in the interest rates constitutes a value of $19,636 on an annual basis and $4,909 per quarter. The interest rate chargeable is a guideline determined by the South African Reserve Bank and gets utilized by financial institutions to determine the financial gain they may derive from a loan. The Prime rate is therefore an arm’s length transaction and justifiable rate that can be applied to a loan within the borders of the Republic of South Africa and therefore complies with the arm’s length definitions in ASC 850-10-50-6. The Consolidated entities, particularly Medinotec Inc. have the option to settle earlier and settlement can be in cash or shares. Minoan Medical Proprietary Limited’s ultimate beneficial owner is the CEO of the Medinotec Group of Companies Dr. Gregory Vizirgianakis and is used to hold his medical investments and exports of which DISA Medinotec Proprietary Limited Incorporated was one of these investments before it got transferred into the Medinotec Group of Companies. Pieter van Niekerk also serves as a director on Minoan Medical Proprietary Limited. 74 Table of Contents Operational charges are charged to the loan account in the Consolidated entities. February 28 2023 $ (audited) February 28 2022 $ (audited restated) Minoan Medical Proprietary Limited 1,862,793 1,583,672 Minoan Capital Proprietary Limited 273 325 Total $ 1,863,066 $ 1,583,997 c. Sales to commonly controlled entities The Consolidated entities sell the majority of their stock to DISA Vascular Distribution t/a DISA Life Sciences. DISA Life Sciences is the main distributor of the products of DISA Medinotec Proprietary Limited in South Africa. This relationship is governed by a distribution agreement which DISA Lifesciences needs to adhere to, the company is owned by an independent third party but according to the distribution agreement DISA Life sciences needs to allow a Director of DISA Medinotec Proprietary Limited Incorporated registered in South Africa to become a board member in an Non – Executive role to oversee that good corporate governance is maintained by the company and that the good name of DISA Medinotec Proprietary Limited Incorporated does not come into despair. Currently, the Board position is held by Mr. Pieter van Niekerk, who is also the CFO of the Medinotec Group of Companies. Mr. van Niekerk has no operational involvement and also no financial interest or benefit paid to him for assuming the role of independent non-executive of the company. Apart from this non-executive directorship position there is no other related party ties to DISA Life Sciences. On October 14, 2022, Mr. Pieter van Niekerk resigned as a director of DISA Lifesciences to focus on other commitments, on this same date the DISA Lifesciences ceased to be a related party to DISA Medinotec. DISA Life Sciences is one of the top 5 biggest distributor of medical devices in the Republic of South Africa and therefore DISA Medinotec Proprietary Limited registered in South Africa utilizes their sales footprint for cost efficiencies. All trading is considered to be at arm's length. Minoan Medical Proprietary Limited’s ultimate beneficial owner is the CEO of the Medinotec Group of Companies Dr. Gregory Vizirgianakis and is used to hold his medical investments and exports of which DISA Medinotec Proprietary Limited Incorporated was one of these investments before it got transferred into the Medinotec Group of Companies. All sales made to Minoan Medical Proprietary Limited were utilized to build the export market for DISA Medinotec South Africa. In the future these sales will be made directly to the export countries without utilizing Minoan Medical Proprietary Limited as an intermediate. These sales were made on the same terms as the DISA Life Sciences distribution agreement. Pieter van Niekerk also serves as a director on Minoan Medical Proprietary Limited. The distribution agreement between DISA Lifesciences and DISA Medinotec Proprietary Limited Incorporated was entered into after a market feasibility study was conducted. Medical devices are registered with a fixed maximum sales price, which is regulated within South Africa. It was determined that the profit split allowed between the two companies would be based on this approved market price, where DISA Lifesciences would be allowed only to have 10% of the total sales value and DISA Medinotec Proprietary Limited Incorporated the remaining balance. This profit split was determined by a benchmark study that was completed by an external firm who compared the profit margins of a distribution/wholesale business. The allowed profit margin was concluded as being within the appropriate benchmark and therefore arm’s length. The data base used to determine the market related margin is the Worldwide Private Company Data Base from Thomson Reuters. Therefore, this agreement is deemed to be market related and at arm’s length and compliant with. ASC 850-10-50-6 and ASC 850-10-50-5. 75 Table of Contents Sales between the entities are settled on a regular basis and there is no long outstanding Accounts receivable. Set forth below is a table showing the Consolidated entities sales and accounts receivable for the year ended February 28, 2023 and year ended February 28, 2022 with DISA Lifesciences and Minoan Medical. February 28 2023 $ (audited) For the period April 26, 2021 to February 28, 2022 $ (audited) DISA Life Sciences Sales 335,786 525,558 Accounts receivable 1,242 Minoan Medical Sales — 465,695 These transactions occurred in the normal course of operations and are measured at the exchange amount, which is the amount of the consideration established and agreed to by the related parties. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Mercurius & Associates LLP (Formerly knowns as AJSH & Co LLP) served as our independent registered public accountants for the years ended February 28, 2023 and 2022. Audit Fees For the Company’s fiscal years ended February 28, 2023 and 2022, we were billed approximately $120,561 and $13,091, respectively, for professional services rendered by our independent auditors for the audit and review of our financial statements. Audit Related Fees There were no fees for audit related services rendered by our independent auditors for the years ended February 28, 2023 and 2022, respectively. Tax Fees For the Company’s fiscal years ended February 28, 2023 and 2022, there were no fees for professional services rendered by our independent auditors for tax compliance, tax advice, and tax planning. All Other Fees For the Company’s fiscal years ended February 28 2023 and 2022, we were no billed any other fees by our auditors. 76 Table of Contents PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. (a)(1) FINANCIAL STATEMENTS. The following documents are included on pages F-1 through F-23 attached hereto and are files as part of this Annual Report on Form 10-K. Reference is made to the Index to Consolidated Financial Statements on Page F-1.(a)(2) EXHIBITS (a)(2) EXHIBITS We have filed the exhibits listed on the accompanying Exhibit Index of this registration statement and below in this Item 15: Incorporated by Exhibit Reference Filed or Furnished Number Exhibit Description Form Exhibit Filing Date Herewith 2.1 Share Exchange Agreement, dated March 2, 2022 S-1 2.1 6/2/2022 3.1 Articles of Incorporation S-1 3.1 6/2/2022 3.2 Articles of Amendment S-1 3.3 6/2/2022 3.3 Bylaws S-1 3.3 6/2/2022 4.1 Unsecured Revolving Promissory Note, dated September 16, 2022 S-1/A 4.1 11/2/2022 10.1 Lease Agreement dated January 28, 2020 between Minoan Capital and DISA Medinotec Proprietary Limited S-1/A 10.1 8/4/2022 10.2 Exclusive Distribution Agreement dated March 1, 2020 between Disa Life Sciences Proprietary Limited and DISA Medinotec Proprietary Limited S-1/A 10.2 8/4/2022 10.3 Letter of Offer, dated April 26, 2021 with Gregory Vizirgianakis S-1/A 10.3 8/30/2022 10.4 Letter of Offer, dated April 26, 2021 with Peter van Niekerk S-1/A 10.4 8/30/2022 10.5 Letter of Offer, dated June 13, 2021 with Stavros Vizirgianakis S-1/A 10.5 8/30/2022 10.6 Letter of Offer, dated June 13, 2021 with Joseph P Dwyer S-1/A 10.6 8/30/2022 10.7 Loan Certificate dated Mary 1, 2017 S-1/A 10.7 8/30/2022 21.1 List of Subsidiaries Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited X 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended . X 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended . X 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350 . X 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Linkbase Document. X 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). 77 Table of Contents ITEM 16. 10-K SUMMARY None SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATE SIGNATURE TITLE May 30, 2023 /s/ Gregory Vizirgianakis Chief Executive Officer and Director Gregory Vizirgianakis (Principal Executive Officer) DATE SIGNATURE TITLE May 30, 2023 /s/ Peter van Niekerk Chief Financial Officer and Director Peter van Niekerk (Principal Financial Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. DATE SIGNATURE TITLE May 30, 2023 /s/ Gregory Vizirgianakis Chief Executive Officer and Director Gregory Vizirgianakis (Principal Executive Officer) DATE SIGNATURE TITLE May 30, 2023 /s/ Peter van Niekerk Chief Financial Officer and Director Peter van Niekerk (Principal Financial Office and Principal Accounting Officer) DATE SIGNATURE TITLE May 30, 2023 /s/ Stavros G. Vizirgianakis and Director Stavros G. Vizirgianakis DATE SIGNATURE TITLE May 30, 2023 /s/ Joseph P. Dwyer Director Joseph P. Dwyer 78 Table of Contents ITEM 15 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MEDINOTEC, INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 28, 2023 AND 2022 CONTENTS Page Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of February 28, 2023 and February 28 2022 F-2 Consolidated Statements of Operations for the Years Ended February 28, 2023 and f or the period 26 April 2021 to 28 February 2022 F-3 Consolidated Statements of Stockholders’ Deficit for the Years Ended February 28, 2023 and February 28, 2022 F-4 Consolidated Statements of Cash Flows for the Years Ended February 28, 2023 and f or the period 26 April 2021 to 28 February 2022 F-5 Notes to Consolidated Financial Statements F-6 79 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Medinotec Inc. Opinion on the Financial Statements We have audited the accompanying Consolidated Balance Sheets of Medinotec Inc. and its subsidiaries (collectively, the “Company”) as on February 28, 2023 and February 28, 2022, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended February 28, 2023 and for the period from April 26, 2021 to February 28, 2022 and the related notes (collectively referred to as the "Financial Statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2023 and February 28, 2022 and the results of its operations and its cash flows for the year ended February 28, 2023 and for the period from April 26, 2021 to February 28, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statement. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter We draw attention to Note 2a(ii) to the consolidated financial statements which describes that the Consolidated Balance Sheet as on February 28, 2022 and the related consolidated statement of operations, changes in stockholders’ deficit and cash flow for the period from April 26, 2021 to February 28, 2022 and the related notes have been restated to consolidate the commonly controlled entities retrospectively, as if the transaction had occurred at the beginning of the previous period (i.e. formation date of registrant). Our opinion is not modified with respect to this matter. Critical Audit Matter The Critical Audit Matter are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. Mercurius & Associates LLP (Formerly known as AJSH & Co LLP) We have served as the Company’s auditor since 2022 PCAOB # 3223 New Delhi, India May 30, 2023 F- 1 Table of Contents Consolidated Balance Sheets as of February 28, 2023 and February 28 2022 Note Audited 2023 $ Audited restated 2022 $ Assets Current Assets Cash 2,827,457 131,577 Accounts receivable, net of allowances 21,074 42,183 Inventory 5. 354,304 438,923 Other current assets 166,643 109,019 Total Current Assets 3,369,478 721,702 Loans and notes receivable 13. 605,130 — Property, plant and equipment, net of accumulated depreciation 4. 406,873 515,703 Deferred tax asset 10. 108,951 85,626 Total Assets $ 4,490,432 $ 1,323,031 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities 7. 71,311 209,019 Long Term Liabilities Loans payable 6. 1,863,066 1,583,997 Total Liabilities 1,934,377 1,793,016 Equity Capital stock 9. 11,734 10,000 Capital stock additional paid in capital 3,296,391 — Deficit (Retained Earnings) - ending ( 836,637 ) ( 483,902 ) Accumulated other comprehensive income/(loss) 84,567 3,917 Total Equity 2,556,055 ( 469,985 ) Total Liabilities and Equity $ 4,490,432 $ 1,323,031 The accompanying notes are an integral part of these audited consolidated financial statements. F- 2 Table of Contents Consolidated Statements of Operations for the Years Ended February 28, 2023 and for the period April 26, 2021 to February 28, 2022 Audited 2023 $ Audited restated For the period April 26, 2021 to February 28, 2022 $ Revenue $ 999,579 $ 1,040,283 Cost of goods sold ( 417,757 ) ( 585,129 ) Gross profit 581,822 455,154 Operating expenses Selling expenses 53,818 16,744 Depreciation and amortization expense 53,553 82,809 Interest and bank charges 234,411 13,209 General and administrative expenses 640,575 498,241 Research and development expenses 64,866 34,767 Total operating expenses 1,047,223 645,770 Income from operations ( 465,401 ) ( 190,616 ) Non operating income and expenses Interest income 22,507 30 Other revenue/(expense) 51,417 1,584 Total non operating income and expenses 73,924 1,614 Loss before income taxes ( 391,477 ) ( 189,002 ) Income taxes Deferred income taxes ( 38,742 ) ( 65,003 ) Net income $ ( 352,735 ) $ ( 123,999 ) Earnings per share: ( 0.03 ) ( 0.01 ) Note Audited 2023 $ Audited Restated For the period April 26, 2021 to February 28, 2022 $ Net loss ( 352,735 ) ( 123,999 ) Foreign currency translation gain 80,650 3,917 Accumulated comprehensive income $ ( 272,085 ) $ ( 120,082 ) The accompanying notes are an integral part of these audited consolidated financial statements. F- 3 Table of Contents Consolidated Statements of Stockholders’ Deficit for the Years Ended February 28, 2023 and for the period April 26, 2021 to February 28, 2022 Common Stock Common Stock Additional Paid in Capital Shares Amount $ Amount $ Accumulated Comprehensive Income $ Retained Earnings (Deficit) $ Subtotal $ Common control reserve $ Total $ Balance, April 26, 2021 — — — 3,917 ( 123,999 ) ( 110,082 ) — ( 120,082 ) Other comprehensive income Stock issued Issuance of 10,000,000 no par value stock @ $0.001 per share 10,000,000 10,000 — — — 10,000 — 10,000 Acquisition of Disa Medinotec Proprietary Limited — — — — — — ( 359,903 ) ( 359,903 ) Balance restated, February 28, 2022 10,000,000 10,000 — 3,917 ( 123,999 ) ( 100,082 ) ( 359,903 ) ( 469,985 ) Balance March 1, 2022 10,000,000 10,000 — 3,917 ( 123,999 ) ( 100,082 ) ( 359,903 ) ( 469,985 ) Net income (loss) for the period — — — — ( 352,735 ) ( 352,735 ) — ( 352,735 ) Other comprehensive income Net foreign currency translation adjustment — — — 80,650 — 80,650 — 80,650 Stock issued Stock issued - pursuant to acquisitions @ $2 per share 1,733,750 11,734 3,465,766 — — 3,467,500 — 3,467,500 Other increase/decrease in stock Raising fees capitalized — — ( 169,375 ) — — ( 169,375 ) — ( 169,375 ) Balance, February 28, 2023 11,733,750 $ 11,734 $ 3,296,391 $ 84,567 $ ( 476,734 ) $ 2,925,958 $ ( 359,903 ) $ 2,556,055 The accompanying notes are an integral part of these audited consolidated financial statements. F- 4 Table of Contents Consolidated Statements of Cash Flows for the Years Ended February 28, 2023 and for the period April 26, 2021 to February 28, 2022 Audited 2023 $ Audited Restated for the period April 26, 2021 to February 28, 2022 $ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) for the period ( 352,735 ) ( 123,999 ) Depreciation, depletion and amortization 53,553 82,809 Foreign currency transaction gain (loss), unrealized ( 80,643 ) 2,895 Deferred income taxes and tax credits ( 23,325 ) ( 63,177 ) Capital raising fee paid in equity ( 169,375 ) — Interest 156,070 — Increase (decrease) in receivables ( 21,019 ) ( 109,460 ) Increase (decrease) in inventories 84,619 ( 14,113 ) Increase (decrease) in accounts payable and accrued expenses ( 137,708 ) 88,032 TOTAL CASH FLOWS FROM OPERATING ACTIVITIES ( 490,549 ) ( 137,013 ) CASH FLOWS FROM INVESTING ACTIVITIES: Payments to acquire property, plant, and equipment 55,277 ( 90,556 ) Proceeds from issuance of long-term debt ( 585,000 ) — NET CASH USED BY INVESTING ACTIVITIES ( 529,723 ) ( 90,556 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 279,069 267,149 Proceeds from issuance of common stock 3,298,125 10,000 NET CASH USED BY FINANCING ACTIVITIES 3,577,194 277,149 OTHER ACTIVITIES: Effect of exchange rate on cash and cash equivalents 138,958 1,022 Net cash increase (decreases) in cash and cash equivalents 2,695,880 50,602 Cash and cash equivalents at beginning of period 131,577 80,975 Cash and cash equivalents at end of period $ 2,827,457 $ 131,577 The accompanying notes are an integral part of these audited consolidated financial statements. F- 5 Table of Contents Notes to Consolidated Financial Statements 1. Description of Business Medinotec, Inc (the “Company” or “COMPANY”), was incorporated in Nevada on April 26, 2021 . During March 2022 the Group acquired, through a subsidiary, Disa Medinotec Proprietary Limited. DISA Medinotec Proprietary Limited was incorporated in the Republic of South Africa in 2015. It was formerly known as DISA Vascular 2015 Proprietary Limited and changed its name to DISA Medinotec Proprietary Limited effective 19 October 2020. The Company produces high-quality medical devices through in-depth research and development. The products developed are sold via a network of distributors in many parts of the world and through a direct sales force in South Africa and the United States of America. The Company is located and headquartered in Johannesburg, South Africa. The Company’s revenues are derived primarily from operations in South Africa and Europe while growing its product offering to penetrate the United States of America in the near future. The Group’s consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. 2. Significant Accounting Policies a. Nature of business/basis of preparation i. GAAP of country The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, and conform in all material respects with International Accounting Standards with regards to the presentation of historical cost financial information. The event that caused the common control transaction, as described in the business combination note, occurred after the prior 2021 year had been reported on. Change in reporting entity ii. Transaction between entities- Common control On March 2, 2022, Medinotec Inc. through Medinotec Capital Proprietary Limited acquired 100 percent of the issued and outstanding shares of DISA Medinotec Proprietary Limited. The consideration payable was $ 11 for the outstanding equity and the Group assumed the responsibility of the loan account ( $ 1,583,661 ) payable to Minoan Medical Proprietary Limited. Due to the control of businesses being in principle 95% the same between the Group and the previous ultimate beneficial owner of DISA Medinotec Proprietary Limited the transaction would therefore be deemed a common control transaction . Due to common control being established on April 26, 2021 (the incorporation date of the registrant) the effective date is deemed to be at this date. F- 6 Table of Contents To properly account for the transfer of the membership interests of DISA Medinotec Proprietary Limited, the Company reviewed the ownership structure of all of the entities involved in the contribution transaction, as contemplated in the Registration Statement, and concluded that in accordance with ASC 805-50-25-2, the contribution of such membership interests will qualify as a transfer of ownership between entities under common control. Transactions between entities under common control are accounted for in a manner similar to the pooling of-interest method. Thus, the financial statements of the commonly controlled entities would be consolidated, retrospectively, as if the transaction had occurred at the beginning of the period. However, ASC 805-50-45-5 states that prior years’ comparative information is only adjusted for periods during which the entities were under common control. In addition, ASC 805-50-45-2 requires that the “effects of intra-entity transactions on current assets, current liabilities, revenue, and cost of sales for periods presented and on retained earnings at the beginning of the periods presented shall be eliminated to the extent possible. DISA Medinotec Proprietary Limited was deemed to be under common control prior to March 2, 2022 share transfer date and therefore the acquisition was retrospectively applied from April 26, 2021, the formation date of registrant. If a transaction combines two or more entities under common control that historically have not been presented together, the resulting financial statements may be considered to be those of a different reporting entity. The change in reporting entity requires retrospective combination of the entities for all periods presented as if the combination had been in effect since inception of common control in accordance with ASC 250-10-45-21. Also, ASC 250-10-50-6 notes that when there has been a change in the reporting entity, the financial statements of the period of the change shall describe the nature of the change and the reason for it. In addition, the effect of the change on income from continuing operations, net income (or other appropriate captions of changes in the applicable net assets or performance indicator), other comprehensive income, and any related per-share amounts (if applicable shall be disclosed for all periods presented. a change in reporting entity does not have a material effect in the period of change but is reasonably certain to have a material effect in later periods, the nature of and reason for the change shall be disclosed whenever the financial statements of the period of change are presented. The effects of this change are as follows: Before restatement 2022 $ After restatement 2022 $ Increase in net profit/(loss) ( 161 ) ( 123,999 ) Increase in opening retained reserves ( 610 ) ( 359,903 ) Increase in other comprehensive income 449 3,917 b. Foreign currency translation i. Translation of foreign subsidiary The accounts of the foreign subsidiaries are translated into U.S. dollars. Assets and liabilities are translated at year-end exchange rates and income and expense accounts are translated at average exchange rates in effect during the year. Translation adjustments resulting from fluctuations in the exchange rates are recorded in accumulated other comprehensive income, a separate component of stockholders' equity. c. Cash and cash equivalents i. Highly liquid investments The group considers all highly liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. These cash equivalents consist primarily of term deposits and certificates of deposit. Investments with maturities from greater than three months to one year are classified as short-term investments, while those with maturities in excess of one year are classified as long-term investments. Cash equivalents and short-term investments are stated at cost which approximates market value. F- 7 Table of Contents d. Receivables i. Allowance based on a review and management evaluation The group provides an allowance for losses on trade receivables based on a review of the current status of existing receivables and management's evaluation of periodic aging of accounts. Accounts receivable are stated at net realizable value. The majority of customers are not extended credit and therefore time to maturity for receivables is short. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance or if any accounts should be written off based on a past history of write-offs, collections, and current credit conditions. A receivable is considered past due if the Company has not received payments based on agreed-upon terms. The Company generally does not require any security or collateral to support its receivables. No allowance for doubtful debt was recognized as at February 28, 2023 and February 28, 2022, respectively. e. Property, plant and equipment i. Depreciation rates Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is provided for using the straight-line method over the estimated useful lives as follows for the major classes of assets: Plant and machinery 10 years Laboratory equipment 5 years Furniture and fixtures 6 years Motor vehicles 5 years Computer equipment 3 years Office equipment 6 years Computer software 2 years f. Inventories i. Valuation, costing and obsolescence Inventories are stated at the lower of cost (Weighted Average) or net realizable value and consist of raw materials, work-in process and finished goods and include purchased materials, machine time, direct labor and manufacturing overhead. Management evaluates the need to record adjustments to write down inventory to the lower of cost or net realizable value on an annual basis. The Company’s policy is to assess the valuation of all inventories, including raw materials, work-in-process and finished goods and it writes down its inventory for estimated obsolescence based upon the age of inventory and assumptions about future demand and usage. g. Impairment of long lived assets The Company assesses long-lived assets for impairment in accordance with the provisions of Financial Accounting Standards Board ASC 360, Property, Plant and Equipment. Long-lived assets (asset group), such as property and equipment subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. As of May 31, 2022 and February 28, 2021, no impairment charge has been recorded. F- 8 Table of Contents h. Employee benefit plans The Company contributes 2.5 % for eligible employees to a pension plan registered under the laws of South Africa. The company also contributes a third of the medical aid contribution for eligible employees to an approved medical insurance scheme. i. Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. j. Financial instruments i. Fair Value Measurements Fair value accounting is applied for all assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Consolidated entities follow the established framework for measuring fair value and expands disclosures about fair value measurements (see Note 3). ii. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, trade accounts receivable and loans. The Company invests its excess cash in low-risk, highly liquid money market funds and certificates of deposit with a major financial institution. iii. Exposed to currency variations in subsidiary The primary operations and functional currency of a subsidiary's business is in South African Rand. Due to the emerging market nature of this currency the spread volatility of the currency low and high can be material during a year. The conversion of the currency from Rand to reporting currency US Dollar can cause significant up or downward trends that is recorded in reserves under the heading accumulated comprehensive income. The effect on the reserves for the year ended February 28, 2023 was $80,643. F- 9 Table of Contents iv. Interest rate Risk Related party loan interest. Market interest rate risk may result in loss from fluctuations in the future cash flows or fair values of financial instruments. Interest rate risk is managed principally through monitoring interest rate gaps and basis risk and by having pre-approved limits for repricing bands. v. Numerous risks due to international activities The Consolidated entities are subject to numerous risks as a result of its international activities. The Consolidated entities are dependent, in large part, on the economies of the markets in which they have operations. Those markets and other markets in which the Consolidated entities may operate are in countries with economies in various stages of development, some of which are subject to rapid fluctuations in currency exchange rates, consumer prices, inflation, employment levels and gross domestic product. As a result, the Consolidated entities are exposed to market risk from these changes, and are subject to other economic and political risks, which could impact their results of operations and financial condition. k. Comprehensive income i. Comprehensive income Comprehensive income is defined as the change in equity from transactions and other events from non-owner sources and is comprised of of net income and other comprehensive income (OCI). OCI includes currency translation adjustments on the group's net investment in self-sustaining foreign operations and related hedging gains and losses, translation adjustments related to the translation from the Consolidated entities functional currency to its presentation currency, unrealized gains and losses on available-for-sale securities, hedging gains and losses on cash flow hedges and unrealized net actuarial gain or loss from pension and other postretirement benefit plans. l. Revenue recognition The consolidated entities generate their revenues from the sale of high-quality medical devices which are self-manufactured through in-depth research and development. The products developed are sold via a network of distributors in many parts of the world and through a direct sales force in South Africa. All sales are made with Free on Board INCO terms therefore the risk transfers to the purchaser as soon as it leaves the warehouse of DISA Medinotec. Revenues are recognized when control of the promised goods or services are transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those products. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its arrangements: • identify the contract with a customer, • identify the performance obligations in the contract, • determine the transaction price, • allocate the transaction price to performance obligations in the contract, and • recognize revenue as the performance obligation is satisfied. Under ASC Topic 606, the Company estimates the transaction price, including variable consideration, at the commencement of the contract and recognizes revenue over the contract term, rather than when fees become fixed or determinable. F- 10 Table of Contents Payment Terms Our payment terms generally are 30 days from statement. The time between a customer’s payment and the receipt of funds is not significant. Our contracts with customers do not result in significant obligations associated with returns, refunds or warranties. Our payment terms are generally fixed and do not include variable revenues. i. Accordance with industry practice Sales revenue is recognized in accordance with industry practice which is when all the risks and benefits of ownership of products have been transferred to customers under executed sales agreements. m. Cost of goods sold Cost of revenue consists primarily of raw material purchases, manufacturing costs and employee benefits paid to operational personnel associated with the production of our medical devices. n. Principles of consolidation i. Consolidated - all intercompany transactions eliminated The consolidated financial statements include the accounts of Medinotec Inc., Medinotec Capital Proprietary Limited Consolidated and the financial statements of DISA Medinotec Proprietary Limited, known as the Medinotec Group of Companies. All significant intercompany transactions have been eliminated. o. Use of estimates i. Actual results could differ The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and may have impact on future periods. p. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and has since issued amendments thereto, related to the accounting for leases (collectively referred to as “ASC 842”). ASC 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all long-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition and classification in the consolidated statement of operations. The Company adopted ASC 842 on April 26, 2021. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. F- 11 Table of Contents q. Recently issued accounting standards i. Financial Instruments--Credit Losses In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, “Financial Instruments--Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. With respect to available-for-sale (AFS) debt securities, the standard amends the current other-than-temporary impairment model. For such securities with unrealized losses, entities will still consider if a portion of any impairment is related only to credit losses and therefore recognized as a reduction in income. However, rather than also reflecting that credit loss amount as a permanent reduction in cost (amortized cost) basis of that AFS debt security, the standard requires that credit losses be reflected as an allowance. As a result, under certain circumstances, a recovery in value could result in previous allowances, or portions thereof, reversing back into income. This standard expands the disclosure requirements regarding credit losses, including the credit loss methodology and credit quality indicators. For the group, this standard is effective December 15, 2022, with early adoption permitted. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Consolidated entities are currently assessing this standard’s impact on the Consolidated entities (consolidated) result of operations and financial condition. 3. Fair Value Measurements The Consolidated entities report all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3—Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. At February 28, 2023 and February 28, 2022, all of the Company’s cash and cash equivalents, trade accounts receivable and trade accounts payable were short term in nature, and their carrying amounts approximate fair value. Our current and long-term debt arrangements are classified as level 2 financial instruments. F- 12 Table of Contents 4. Property, plant and equipment a. Accounts by period Property, plant and equipment consist of the following: Audited 2023 $ Audited Restated 2022 $ Leasehold improvement 19,134 22,824 Computer equipment 152,731 182,184 Computer software 58,551 69,842 Office equipment 7,273 8,676 Furniture and fixtures 103,578 122,418 Audited 2023 $ Audited Restated 2022 $ Motor vehicles 12,446 14,846 Small assets 14,146 16,874 Plant and machinery 1,104,182 1,256,690 Laboratory equipment 249,995 298,205 Total cost 1,722,036 1,992,559 Foreign currency adjustment 90,379 32,891 Total accumulated depreciation ( 1,405,542 ) ( 1,509,747 ) Total $ 406,873 $ 515,703 Depreciation and amortization of property, plant and equipment totaled approximately $53,553 for the period ending February 28, 2023. The company has not acquired any property and equipment under capital leases. 5. Inventories a. Accounts by period Inventory consists of the following: Audited 2023 $ Audited Restated 2022 $ Merchandise 381,390 438,923 Less provisions for obsolescence ( 27,086 ) — Total $ 354,304 $ 438,923 F- 13 Table of Contents 6. Loans Payable a. Loans from related parties Other financial liabilities consists of a loan from a related party: Audited 2023 $ Audited Restated 2022 $ Minoan Medical Proprietary Limited 1,862,793 1,583,672 Minoan Capital Proprietary Limited 273 325 Total debt 1,863,066 1,583,997 Minoan Medical Proprietary Limited: This is an unsecured loan which is repayable over the next 3 years . The loan carries interest at the prevailing prime lending rate of the time (2022: interest free) . The prevailing lending rate in South Africa was 10.75 % at year end. The terms of this loan are deemed to be market related. The company has the option to early settlement in cash or shares. Minoan Capital Proprietary Limited: This is an unsecured, interest free loan with no fixed terms of repayment. Minoan Medical and Minoan Capital are related parties of the Group as the CEO Dr Gregory Vizirgianakis has common control. 7. Accounts payable and accrued expenses a. Accounts payable by period Accounts payable consist of the following: Audited 2023 $ Audited Restated 2022 $ Trade accounts payable 53,615 160,687 Accrued payroll, payroll taxes and vacation 6,995 8,714 Deferred rent — 183 Royalties payable 10,701 — 2023 $ 2022 $ Other payables — 39,435 Total $ 71,311 $ 209,019 F- 14 Table of Contents 8. Commitments a. Leases and deferred rent The Company leases office and warehouse spaces under noncancelable operating lease agreements, which expire through 2023. The Company is required to pay property taxes, insurance, and normal maintenance costs for certain of these facilities and will be required to pay any increases over the base year of these expenses on the remainder of the Company’s facilities. Certain of the Company’s operating leases contain predetermined fixed escalations of minimum rentals during the lease term. For these leases, the Consolidated entities recognizes the related rental expense on a straight- line basis over the life of the lease from the date the Consolidated entities takes possession of the office and records the difference between amounts charged to operations and amounts paid as deferred rent. As of February 28, 2023 $ 0 had been accrued. It is the intention of management to renew the lease under the same terms. Future minimum lease payments under noncancelable operating leases as of February 28, 2023, are as follows: Years ending February 28 Audited 2023 $ 2023 $ 41,075 Rental expense for operating leases for the period ended February 28, 2023 was $ 39,984 . b. Litigation From time to time, the Group may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the Consolidated entities my agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Consolidated entities, with respect to certain matters. The Consolidated entities has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Group’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Consolidated entities limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. From time to time, the Consolidated entities are subject to various claims that arise in the ordinary course of business. Management believes that any liability of the consolidated entities that may arise out of or with respect to these matters will not materially adversely affect the financial position, results of operations, or cash flows of the Consolidated entities. At reporting date there is no known material litigation or claims against the Group. F- 15 Table of Contents 9. Stockholders' equity a. Authorized and issued stock by period Authorized: As of February 28, 2023 the Company had 188,266,250 shares of common stock authorized and available to issue for purposes of satisfying conversion of preferred stock, the exercise of warrants, the exercise and future grant of common stock options, and for purposes of any future business acquisitions and transactions. As of February 28, 2023, Medinotec Inc., the parent Company had 20,000,000 shares of preferred stock authorized and available to issue. Issued and outstanding shares Audited 2023 Audited Restated 2022 Common shares 11,734 10,000 Additional paid in capital 3,296,391 — Total $ 3,308,125 $ 10,000 10. Income taxes a. Provision for income taxes The components of income tax expense are as follows: Audited Audited Restated for the period April 26, 2011 to February 28, 2023 2022 Continuing operations Current Deferred/future Foreign ( 38,742 ) ( 65,003 ) Total tax continuing operations ( 38,742 ) ( 65,003 ) Discontinued operations Current Total $ ( 38,742 ) $ ( 65,003 ) b. Deferred taxes/Future income tax assets and valuation allowance Significant components of the group's future tax assets are as follows: Audited 2023 $ Audited Restated For the period April 26, 2021 to February 28, 2022 $ Deferred rent — 51 Leave pay provision 3,102 895 Assessed losses 105,849 84,680 Total 108,951 85,626 Net deferred/future tax asset $ 108,951 $ 85,626 Deferred tax assets refer to assets that are attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets in essence represent future savings of taxes that would otherwise be paid in cash. The realization of the deferred tax assets is dependent upon the generation of sufficient future taxable income, including capital gains. If it is determined that the deferred tax assets cannot be realized, a valuation allowance must be established, with a corresponding charge to net income. F- 16 Table of Contents 11. Transactions with related parties Name Relationship with the Medinotec Group of Companies Related transactions with the Medinotec Group of Companies Related Directors with the Medinotec Group of Companies Related Owners with the Medinotec Group of Companies Minoan Medical Proprietary Limited Medical investment company controlled by Dr Gregory Vizirgianakis Related Party Loan and Sales Dr Gregory Vizirgianakis Pieter van Niekerk Dr Gregory Vizirgianakis is the ultimate beneficial owner Minoan Capital Proprietary Limited Property investment company controlled by Dr Gregory Vizirgianakis Related party loan Rental Expenses Dr Gregory Vizirgianakis is the ultimate beneficial owner DISA Vascular Distribution Proprietary Limited trading as DISA Lifesciences Distributor appointed by DISA Medinotec Proprietary Limited for Africa Sales Income Pieter van Niekerk – Serves as independent non-executive according to distribution agreement Pieter van Niekerk resigned as a non-executive director on October 14, 2022 and therefore the related party relationship ceased to exist on the same date. n/a external third party Medinotec Capital Proprietary Limited The African holding company of the Medinotec Group of Companies Related party loan payable to Minoan Capital Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity DISA Medinotec Proprietary Limited The African operating and manufacturing company Related party loan with Minoan medical Operational income and expenses with Minoan Medical Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity Medinotec Incorporated Nevada Ultimate parent of Medinotec Capital and DISA Medinotec All of the above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Medinotec Group of Companies The Consolidated group name of Medinotec Incorporated, Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Pieter van Niekerk Chief financial officer of the Medinotec Group of Companies Transactions relating to mutual entities disclosed above Related directorships disclosed above Minority Shareholder in Medinotec Inc Gregory Vizirgianakis Chief Executive officer of the Minoan Group of Companies Brother of Stavros Vizirgianakis Transactions relating to mutual entities disclosed above Related directorships disclosed above Shareholder in Medinotec Inc and Kingstyle investments. Stavros Vizirgianakis Non-Executive director of the Medinotec Group of companies Brother of Gregory Vizirgianakis Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a Joseph Dwyer Non-Executive director of the Medinotec Group of companies Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a F- 17 Table of Contents a. Rent DISA Medinotec Propriety Limited leases commercial buildings from Minoan Capital Proprietary Limited (“Minoan Capital”). Minoan Capital is owned 100 % by the Chief Executive Officer of the Medinotec Group of Companies, Dr. Gregory Vizirgianakis. Pieter van Niekerk, CFO of the Medinotec Group of Companies, also serves as a director on Minoan Medical Proprietary Limited Set forth below is a table showing the Consolidated entities' rent paid and accounts payable for the year ended February 28, 2023 with Minoan Capital: Audited Audited Restated for the period April 26, 2021 to February 28, 2023 $ 2022 $ Rent 39,984 38,157 Accounts payable $ — $ — Rent is comparable to rent charged for similar properties in the same relative area. The company does market research of a Minimum and a Maximum rental value within the area at every renewal of the rental agreement to ensure this is market related, this exercise is undertaken together with a registered property agent who has the appropriate knowledge of the area. ASC 850-10-50-6. b. Loan This is an unsecured loan from the prior parent entity of DISA Medinotec Proprietary Limited incorporated in South Africa called Minoan Medical Proprietary Limited. This loan originated to fund working capital and capex expansions of DISA Medinotec Proprietary Limited Incorporated during the developmental and startup phase. After the acquisition of DISA Medinotec Proprietary Limited into the Medinotec Group of companies, the Medinotec Group of Companies assumed this liability. During the Covid challenges, interest on the loan was waived due to the loan being classified as an equity investment at that stage, before the post balance sheet transfer of DISA Medinotec Proprietary Limited Incorporated to the Medinotec Group of Companies. The Medinotec Group of Companies has a period of 3 years post any IPO date/ date at which the company starts trading on a recognizable exchange to repay the loan, during these 3 years the loan will carry interest at the prevailing prime lending rate of the time. The current prevailing prime lending rate in South Africa is 10.75 % . The interest charged for the year was $ 51,545 and a 1% movement in the interest rates constitutes a value of $19,636 on an annual basis and $4,909 per quarter . The interest rate chargeable is a guideline determined by the South African Reserve Bank and gets utilized by financial institutions to determine the financial gain they may derive from a loan. The Prime rate is therefore an arm’s length transaction and justifiable rate that can be applied to a loan within the borders of the Republic of South Africa and therefore complies with the arm’s length definitions in ASC 850-10-50-6. The Consolidated entities, particularly Medinotec Inc. have the option to settle earlier and settlement can be in cash or shares. Minoan Medical Proprietary Limited’s ultimate beneficial owner is the CEO of the Medinotec Group of Companies Dr. Gregory Vizirgianakis and is used to hold his medical investments and exports of which DISA Medinotec Proprietary Limited Incorporated was one of these investments before it got transferred into the Medinotec Group of Companies. Pieter van Niekerk also serves as a director on Minoan Medical Proprietary Limited. F- 18 Table of Contents Operational charges are charged to the loan account. Audited Audited Restated 2023 $ 2022 $ Minoan Medical Proprietary Limited 1,862,793 1,583,672 Minoan Capital Proprietary Limited 273 325 Total $ 1,863,066 $ 1,583,997 c. Sales to commonly controlled entities The Consolidated entities' sells the majority of their stock to DISA Vascular Distribution t/a DISA Life Sciences. DISA Life Sciences is the main distributor of the products of DISA Medinotec Proprietary Limited in South Africa. This relationship is governed by a distribution agreement which DISA Lifesciences needs to adhere to, the company is owned by an independent third party but according to the distribution agreement DISA Life sciences needs to allow a Director of DISA Medinotec Proprietary Limited Incorporated registered in South Africa to become a board member in an Non – Executive role to oversee that good corporate governance is maintained by the company and that the good name of DISA Medinotec Proprietary Limited Incorporated does not come into despair. Currently, the Board position is held by Mr. Pieter van Niekerk, who is also the CFO of the Medinotec Group of Companies. Mr. van Niekerk has no operational involvement and also no financial interest or benefit paid to him for assuming the role of independent non-executive of the company. Apart from this non-executive directorship position there is no other related party ties to DISA Life Sciences. On October 14, 2022, Mr. Pieter van Niekerk resigned as a director of DISA Lifesciences to focus on other commitments, on this same date the DISA Lifesciences ceased to be a related party to DISA Medinotec. DISA Life Sciences is one of the top 5 biggest distributor of medical devices in the Republic of South Africa and therefore DISA Medinotec Proprietary Limited registered in South Africa utilizes their sales footprint for cost efficiencies. All trading is considered to be at arm's length. Minoan Medical Proprietary Limited’s ultimate beneficial owner is the CEO of the Medinotec Group of Companies Dr. Gregory Vizirgianakis and is used to hold his medical investments and exports of which DISA Medinotec Proprietary Limited Incorporated was one of these investments before it got transferred into the Medinotec Group of Companies. All sales made to Minoan Medical Proprietary Limited were utilized to build the export market for DISA Medinotec South Africa. In the future these sales will be made directly to the export countries without utilizing Minoan Medical Proprietary Limited as an intermediate. These sales were made on the same terms as the DISA Life Sciences distribution agreement. Pieter van Niekerk also serves as a director on Minoan Medical Proprietary Limited. The distribution agreement between DISA Lifesciences and DISA Medinotec Proprietary Limited Incorporated was entered into after a market feasibility study was conducted. Medical devices are registered with a fixed maximum sales price, which is regulated within South Africa. It was determined that the profit split allowed between the two companies would be based on this approved market price, where DISA Lifesciences would be allowed only to have 10% of the total sales value and DISA Medinotec Proprietary Limited Incorporated the remaining balance. This profit split was determined by a benchmark study that was completed by an external firm who compared the profit margins of a distribution/wholesale business. The allowed profit margin was concluded as being within the appropriate benchmark and therefore arm’s length. The data base used to determine the market related margin is the Worldwide Private Company Data Base from Thomson Reuters. Therefore, this agreement is deemed to be market related and at arm’s length and compliant with. ASC 850-10-50-6 and ASC 850-10-50-5. Sales between the entities are settled on a regular basis and there is no long outstanding Accounts receivable. F- 19 Table of Contents Set forth below is a table showing the Company’s sales for the year ended February 28, 2023 and accounts receivable at this date with DISA Life Sciences & Minoan Medical: Audited Audited Restated for the period April 26, 2021 to February 28, 2023 $ 2022 $ DISA Life Sciences Sales 335,786 525,558 Accounts receivable 1,242 1,242 Minoan Medical Sales — 465,695 Total $ 337,028 $ 992,495 These transactions occurred in the normal course of operations and are measured at the exchange amount, which is the amount of the consideration established and agreed to by the related parties. 12. Business acquisitions a. Acquisition of Disa Medinotec Proprietary Limited On March 2, 2022 the Medinotec Inc. and Medinotec Capital Proprietary Limited acquired 100 percent of the issued and outstanding shares of DISA Medinotec Proprietary Limited. The consideration payable was $ 11 for the outstanding equity and the Group assumed the responsibility of the loan account ( $ 1,583,661 ) payable to Minoan Medical Proprietary Limited. Due to the control of businesses being in principal 95% the same between the Group and the previous ultimate beneficial owner of DISA Medinotec Proprietary Limited the transaction would be deemed a common control transaction. Due to common control being established on April 26, 2021 (the incorporation date of the registrant) the effective date is deemed to be at this date. The Group acquired the assets and liabilities noted below (audited): Cash 80,975 Accounts and other receivables 41,742 Inventory 424,810 Property, plant and equipment 507,956 Deferred tax assets 22,449 Accounts payable and accrued liabilities ( 120,987 ) Long-term debt ( 1,316,848 ) Common control reserve $ ( 359,903 ) To properly account for the transfer of the membership interests of DISA Medinotec Proprietary Limited, the Company reviewed the ownership structure of all of the entities involved in the contribution transaction, as contemplated in the Registration Statement, and concluded that in accordance with ASC 805-50-25-2, the contribution of such membership interests will qualify as a transfer of ownership between entities under common control. “When accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer. If the carrying amounts of the assets and liabilities transferred differ from the historical cost of the parent of the entities under common control, for example, because pushdown accounting had not been applied, then the financial statements of the receiving entity shall reflect the transferred assets and liabilities at the historical cost of the parent of the entities under common control.” F- 20 Table of Contents ASC 805-50-15-6 states that the guidance in the Transactions Between Entities Under Common Control Subsections applies to combinations between entities or businesses under common control in which an entity charters a newly formed entity and then transfers some or all of its net assets to that newly chartered entity. If the guidance in the subsection applies, then in accordance with ASC 805-50-30-5, the Company will initially measure the recognized assets and liabilities transferred at their carrying amounts (historical cost) in the accounts of the transferring entity at the date of transfer. The Company believes the financial information of DISA Medinotec Proprietary Limited is properly presented based on the carryover basis of accounting because the transfer of the ownership qualifies as a reorganization of entities under common control. In ASC 805, “control” has the same meaning as “controlling financial interest” in ASC 810-10-15-8. A “controlling financial interest” is generally defined as ownership of a majority voting interest by one entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity. U.S. GAAP does not define the term “common control.” The accounting treatment for the contribution of the membership interests of DISA Medinotec Proprietary Limited into the structure of Medinotec Inc Nevada was based upon the following facts: At the date of incorporation of Medinotec Inc in Nevada April 26, 2021 , Gregory Vizirgianakis (CEO) was the 100 % ultimate beneficial owner of DISA Medinotec Proprietary Limited and owned 95 % of Medinotec Inc in Nevada. Based upon the facts as outlined above, the Company applied the guidance outlined in ASC 805-50 which deals with transactions between entities under common control. Transactions between entities under common control are accounted for in a manner similar to the pooling of-interest method. Thus, the financial statements of the commonly controlled entities would be combined, retrospectively, as if the transaction had occurred at the beginning of the period. However, ASC 805-50-45-5 states that prior years’ comparative information is only adjusted for periods during which the entities were under common control. In addition, ASC 805-50-45-2 requires that the “effects of intra-entity transactions on current assets, current liabilities, revenue, and cost of sales for periods presented and on retained earnings at the beginning of the periods presented shall be eliminated to the extent possible.” DISA Medinotec Proprietary Limited was deemed to be under common control prior to March 2, 2022 share transfer date and therefore the acquisition was retrospectively applied from April 26, 2021, the formation date of registrant. The proforma information as disclosed in this note have been prepared to present this. Proforma 2022 $ Revenue $ 1,215,905 General and administration $ 601,094 Net loss ( 167,764 ) F- 21 Table of Contents 13. Loans and notes receivable a. Loans and notes receivable i. Loans and notes receivable Audited Audited Restated 2023 $ 2022 $ Innovative Outcomes $ 605,130 $ — In furtherance of our efforts to expand into the United States, on September 16, 2022, we entered into an unsecured revolving line of credit to lend Innovative Outcomes, Inc. up to $ 750,000 . We have lent $ 585,000 so far under the line. Innovative Outcomes is a US distributor in Little Rock, Arkansas, and we plan to enter into an arrangement with the company for the marketing and distribution of our products for a fee and to cover expenses. The funds from our line of credit will be used by Innovative Outcomes for setting up infrastructure for our products, including a headquarters for sales representatives, an administrative hub and customer services to handle all back-office items, setting up a sales system and marketing program, warehousing of inventory in a licensed warehouse, setting up distribution capabilities, marketing activities and training activities. • Maximum allowed according to Revolving Credit Agreement: $ 750,000 • Amounts advanced shall bear interest at a per annum rate equal to eight percent ( 8.0 % ), compounded monthly. In the event of a default, any amounts advanced will bear interest at (12%) per annum . • Maturity: September 30, 2024 • Unsecured • Amount drawn: $ 585,000 14. Subsequent events Subsequent to the year ended February 28, 2023, the group obtained a ticker symbol (MDNC) from FINRA (Financial Industry Regulatory Authority) and a subsequent approval and quotation from the OTCQX markets during March 2023. DTC approval was applied for, which after being granted our market maker can start making a market for us. Except for the above-mentioned events, there were no subsequent events for the year ending 28 February 2023. F- 22